Is it true lenders are paying borrowers to short sale their home?

Yes, lenders are doing what is called "Cooperative Short Sales".  Borrowers that cooperate with the lenders are given around $2,500 plus avoiding foreclosure.  Note: a short sale doesn't always mean it will avoid a deficiency so if you owe more than your property is worth be aware of the details as you go through the process.  Remember foreclosure is not only costly for the lender but the borrower too as the deficiency can be much greater by the time the property is foreclosed.  Cooperative Short Sales ultimately benefit all parties to the sale.